In this article, we will list the 5 Best Stocks to Buy According to Billionaire David Abrams. Please visit 12 Best Stocks to Buy According to Billionaire David Abrams if you would like to see the extended list and the methodology behind it.
5. Asbury Automotive Group, Inc. (NYSE:ABG)
Abrams Capital Management’s Stake: $501 Million
Asbury Automotive Group, Inc. (NYSE:ABG) is a long-term holding of Abrams Capital Management. The fund first purchased a stake in the company back in the third quarter of 2017. This position comprised 1 million shares. A year afterwards, the fund added 40% to this stake, increasing share ownership to 1.6 million. A further 20% was added in the next quarter and the holding was increased to nearly 2 million shares. At the beginning of 2020, Abrams loaded up on the stock once again, upping the existing stake by 11%. This brought the shares owned to over 2.1 million. Little to no activity was witnessed to this position till the third quarter of 2025, when the fund improved the position by 2.2%. At the end of the fourth quarter of 2025, Abrams owned nearly 2.2 million shares in the company.
David Abrams of Abrams Capital Management
Asbury Automotive Group, Inc. (NYSE:ABG) has faced headwinds from a recent revenue miss and a cooling automotive market, but elite hedge funds are using this weakness to build massive positions. These funds are betting on the value the stock offers for the long-term, as well as short-term growth signals like Asbury’s digital transformation. The company is currently rolling out the Tekion Dealer Management System across its 46 plus stores. By modernizing the back office of car dealerships with cloud-based AI, the firm aims to cut operational costs significantly. Institutional investors are buying now, expecting these efficiency gains to hit the bottom line by the second half of 2026.
4. Somnigroup International Inc. (NYSE:SGI)
Abrams Capital Management’s Stake: $518 Million
Somnigroup International Inc. (NYSE:SGI) stock shares a similar story to many others in the Abrams Capital Management portfolio. Abrams bought a stake in the company in the third quarter of 2021, comprising 3.6 million shares. The fund did not make major changes to this stake till the first quarter of 2025. During this quarter, it increased the holding by 62%, bringing the shares owned to close to 6 million. Latest filings, submitted at the end of the fourth quarter of 2025, show that only minor adjustments have been made to this position in the past few quarters.
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Somnigroup International Inc. (NYSE:SGI) is the parent company behind brands like Tempur-Pedic and Sealy. Institutional investors are buying the stock because they are betting on a massive earnings unlock for the firm from the recent integration of Mattress Firm into the business. Earlier this month, management raised its synergy targets from this deal, expecting $50 million in benefits for 2026 and reaching a $100 million annual run-rate by 2027. By owning both the manufacturing (Tempur-Sealy) and the retail (Mattress Firm), SGI is capturing a much larger slice of the profit margin. Hedge funds view this as a dominant end-to-end moat. The stock has also surged following reports that Somnigroup entered a non-disclosure agreement to potentially acquire Leggett & Platt (LEG), a major bedding components supplier.
3. Alphabet Inc. (NASDAQ:GOOGL)
Abrams Capital Management’s Stake: $600 Million
Alphabet Inc. (NASDAQ:GOOGL) has featured in the 13F portfolio of Abrams Capital Management since the second quarter of 2018. Back then, the position comprised nearly 2.5 million shares. In the first quarter of 2020, the fund improved this by 21%, increasing the number of shares owned to nearly 3 million. No major change was made to this stake until the end of 2022, when the fund reduced the position by close to 20%. The stake was further trimmed by 11% at the beginning of 2024. Filings for the fourth quarter of 2025 show that the fund has reduced this position by another 10%. This brings the total number of shares owned by the fund to around 1.9 million.
Alphabet Inc. (NASDAQ:GOOGL) features in the stock portfolios of many elite hedge funds. The company is an AI powerhouse. The growth in Google Cloud is also an attractive catalyst. In Q4 2025, Google Cloud revenue surged 48%, reaching $17.7 billion, outperforming Microsoft Azure’s growth for the first time in years. Institutional investors are piling in because Google entered 2026 with a massive $240 billion backlog in cloud contracts, providing highly predictable, high-margin future earnings. Fears about AI killing Google search have also subsided, as the rollout of AI Overviews and the new AI Mode actually increasing search queries, particularly high-value commercial ones.
2. Lithia Motors, Inc. (NYSE:LAD)
Abrams Capital Management’s Stake: $827 Million
Lithia Motors, Inc. (NYSE:LAD) is a long-term stock pick of Abrams Capital Management. It has featured in the 13F portfolio of the fund consistently since the second quarter of 2018. Back then, the stake comprised just over a million shares. In the next quarter, it increased by 92% to more than 2 million shares. A further 15% addition was made in the fourth quarter of 2018 to bring the shares owned to 2.3 million. This position then stayed relatively constant, with minor additions or subtractions. Filings for the fourth quarter of 2025 show that the fund owns nearly 2.5 million shares in the company.
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Lithia Motors, Inc. (NYSE:LAD) has been on the radar of elite hedge funds for a number of reasons. These investors are bullish on Lithia’s aggressive international footprint, which sets it apart from domestic-only peers. Following the 2024 acquisition of Pendragon in the UK, Lithia now generates nearly 19% of its revenue from the British market. Early 2026 data shows that UK service and parts gross margins have surged by 21%. Hedge funds are betting that Lithia’s proprietary management systems will continue to extract higher profits from these European assets than previous owners could. The growth of Driveway Finance Corporation (DFC), Lithia’s in-house lending arm, has also grabbed headlines. The DFC portfolio reached $4.7 billion in 2025. Hedge funds are buying the roadmap to a $17 billion lending portfolio. By financing its own car sales, Lithia captures interest income that would otherwise go to banks.
1. Loar Holdings Inc. (NYSE:LOAR)
Abrams Capital Management’s Stake: $2.1 Billion
Loar Holdings Inc. (NYSE:LOAR) is a relatively recent addition to the 13F portfolio of Abrams Capital Management, compared to other long-term holdings. The fund purchased a stake in the company back in the second quarter of 2024. Back then, this position comprised over 38 million shares. Abrams trimmed this holding by nearly 14% during the second quarter of 2025, bringing the shares owned to around 32 million. Loar remains the largest holding of the fund. The company designs, manufactures, and sells aerospace and defense components for aircraft, and aerospace and defense systems in the United States and internationally. It offers airframe components, structural components, avionics, composites, braking system components, de-ice and ice protection, as well as electro-mechanical and engineered materials.
Loar Holdings Inc. (NYSE:LOAR) is popular among elite investors on Wall Street for a number of reasons. One of these is that the company specializes in acquiring small, niche aerospace companies and integrating them into its higher-margin platform. The late 2025/early 2026 acquisitions of LMB Fans & Motors and Harper Engineering have been key catalysts. Hedge funds are also betting that Loar can expand the Adjusted EBITDA margins of these acquired companies to its corporate target of 40%. Management recently raised its 2026 net sales target to $640 million–$650 million specifically because of these successful integrations.
While we acknowledge the potential of LOAR to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than LOAR and that has 100x upside potential, check out our report about the cheapest AI stock.
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